The humanized DM-204 mAb demonstrated improved binding affinity of up to two orders of magnitude compared to the recently announced first-generation parental murine (mouse) antibody. The increased binding affinity demonstrated by DM-204 has resulted in a significant improvement in glucose utilization over the first-generation antibody as measured by an in vivo Type 2 diabetes oral glucose tolerance test (OGTT). On December 1, 2011, DiaMedica announced results of chronic in vivo treatment with the first-generation DM-204 antibody in a Type 2 diabetes model, which resulted in statistically significant improvements compared to control in the average amount of sugar in blood as measured by HbA1c (2.6%, p=0.0103), fasting blood glucose (70%, p=0.0058), blood pressure (25 mm/Hg, p=0.0004) and cholesterol (>20%, p=0.0156).

The humanization of a mouse antibody is intended to make the mAb more compatible for therapeutic use in man. A mouse antibody delivered in man, may trigger an immune response rendering it immunogenic, however, a humanized version of the same antibody is less immunogenic and therefore therapeutically more effective. The humanization process entails replacing mouse DNA sequence with human DNA sequence making the antibody less immunogenic while ideally not compromising antibody-binding affinity. The humanization of an antibody is the critical step in the development of therapeutic mAbs.

"The fact that our next-generation, humanized mAb, has been able to demonstrate improved binding affinity and significantly improved efficacy, over the already highly effective parental mouse antibody, exceeded our expectations. Furthermore these results indicate that our humanized mAbs may perform even better in man," stated Rick Pauls, President and CEO at DiaMedica. "We have been very encouraged with the recently announced study results and external interest in our diabetes programs."

About DiaMedica

DiaMedica is a biopharmaceutical company that has developed novel therapeutic compounds aimed to improve the lives of patients with diabetes and other major, medical-unmet diseases. DiaMedica's lead compound, DM-199, represents a novel approach to treating Type 1 and Type 2 diabetes by demonstrating significant results against three major aspects of these diseases: 1) halting the autoimmune attack on beta cells; 2) proliferating insulin producing beta cells; and 3) improving glucose control.

The company is listed on the TSX Venture Exchange under the trading symbol 'DMA'.

About Humanized Antibodies

Monoclonal antibody humanization is important for drugs that are to be administered multiple times to individual patients. Research antibodies are typically made in mice and are called murine antibodies. Murine antibodies are not ideal for human clinical use because the patient can potentially recognize the murine antibody as foreign and may generate a Human Anti- Mouse Antibody (HAMA) immune response in an attempt to destroy the murine antibody. Monoclonal antibody humanization is a technique where specific regions of the mouse antibody not involved in target binding are replaced with human antibody building blocks, resulting in a final drug candidate that is approximately 93% human. The result is an antibody that has the targeting characteristics of the original mouse antibody but does not have enough of a mouse structure to be recognized by the human body as foreign. Therefore, humanized antibodies reduce or eliminate the HAMA response during treatment, making multiple treatments possible.

Caution Regarding Forward-Looking Information

The statements made in this press release that are not historical facts contain forward-looking information that involves risk and uncertainties. All statements, other than statements of historical facts, which address DiaMedica's expectations, should be considered forward-looking statements. Such statements are based on management's exercise of business judgment as well as assumptions made by and information currently available to management. When used in this document, the words "may", "will", "anticipate", "believe", "estimate", "expect", "intend" and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect a current view of future events and are subject to certain risks and uncertainties as contained in the Company's filings with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from those anticipated in these forward-looking statements. The Company undertakes no obligation, and does not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events. Although management believes that expectations are based on reasonable assumptions, no assurance can be given that these expectations will materialize.